Financial News vs. Noise
CPI was in line with expectations and the market continued to grind up. Today is mostly likely the most important data point left in the year an all eyes will be on Powell as traders set expectations for interest rates in 2024. My guess is that with all the easing of financial conditions that Powell comes out hawkish, but who knows what the market’s reaction will be. Of particular importance will be the Summary of Economic Projections. When the Fed revised them in September the market sold off on “higher for longer”. In November the rise in Treasury yields was doing much of the Fed’s job for them, which led to a rally in everything. Since then, financial conditions have eased quite a bit so the possibility of a gut punch from Powell is real.
Oil and oil stocks continued lower. I wouldn’t get involved on the long side here unless they can recapture their 200 moving averages. I think oil is due for a bounce but something is wrong and it needs to play out.
I have the same feeling about China. Due for a bounce, and probably a big one, but no interest below the 200 day moving average.
Still bullish on precious metals, but Powell will have a lot to say about their direction tomorrow. My gold and silver positions break even if I am wrong, and make money if I am right. The only way I lose is if they don’t move at all, which I think is unlikely.
We added a Dollar long (UUP), which might be somewhat of a hedge for precious metals. We are also getting close to a spot where we would go long VIX again, even though it seems like it’s on it’s way to zero.
Nothing else of real interest up at these levels without some sort of selloff. I thought the small selloff we saw last week was healthy and would love to see something like that again just to get the overbought out and spark a little fear again.
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News vs. Noise
Watch your wallet anytime someone tells you “always” Bond yields always fall before Federal Reserve pivots to cut interest rates, research says-MarketWatch
Wonder if Vanguard’s outlook has anything to do with what’s best for Vanguard? Case for traditional 60-40 mix of stocks and bonds strengthens amid higher rates, according to Vanguard’s 2024 outlook-MarketWatch
I have a feeling they aren’t going to want to wait. Core Inflation Holds Steady at 4%. Rate Cuts Might Have to Wait.-Barron’s
Something to worry about if you are a buy and holder. Stocks for the long run? Maybe Equities cannot guarantee superior performance over the investment horizon of most investors-FT
Why should we care about new estimates of frankly ancient asset returns? In part because they push back on the idea there is some enduring lawful regularity to long-run US equity outperformance. “What has astonished me is how myths in our industry linger in the face of compelling evidence that they’re wrong,” Arnott tells me. “It’s marvelous to have company in the quixotic task of debunking them.”
Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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